News and analytical reports of the week (29.11 - 05.12.2010)

December 07, 2010

London housing prices on the rise. Bubbles continue to inflate on property markets of Singapore and Israel. Americans are moving to micro-homes. Dubai property is not expected to express upswing until the second half of 2011.

Prices

At the moment average housing prices in Ireland have plunged by more than 36%, compared to the peak indicators of 2006. Experts do not expect to see dramatic improvement in market conditions throughout 2011, but the pace of price declines would be gradually slowing down.

According to Knight Frank, this November property prices in central London have climbed up by 0.9% - a first increase with four months. Buyers from Europe have become the most active investors - over the year, their numbers have increased by 30%.

Residential property prices in Singapore that are at a fairly high level already would continue increasing, the representatives of the Central Bank of the city-state believe. Excessive liquidity of the market may become a key factor pushing up their growth. In Q2 2010 prices gained 5.3%, while climbing by another 2.9% over the third quarter.

Sales

In Q3 2010, Turkish housing sales have averagely declined by 25%, compared to the same period of 2009. Housing demand expressed in the country throughout 2010 is also well below the last year’s indicators. Given the current pace of decline in Turkish consumer activity, prices are unlikely to grow in the near future.

A bubble continues to inflate on Israel's property market. According to the Central Bureau of Statistics of Israel, in October 2010, primary housing demand has increased by 13.7% compared to the preceding month. We would like to remind you that, earlier this year, Israeli authorities were forced to take some measures aimed at stabilizing the property market, but until now the regulations proved to be ineffective.

Taxes

Owners of Canadian commercial properties are forced to give nearly 54% of their income derived from rentals into the treasury. About 34% of this amount is income tax and property tax. USA occupies the second place (41%), while the third line is occupied by Norway (36%). In Finland, which is situated on the last row in the ranking, owners pay only 9% of their rental income from commercial properties.

Forecast

According to estimates of the Jones Lang LaSalle international consulting company, the decrease of Dubai housing prices will continue until the second half of 2011. Neither the state nor the emirate’s banks, many of which are state-owned, back the real estate sector, which has always been developing mainly by means of foreign investment. Many investors still believe that the threat of sovereign debt restructuring is hanging over Dubai, and no growth is expected to be seen on the market in the near future.

Society

A growing number of Americans is buying or building houses sized like an average living room not only for installing them on their backyard (as a guest-house) or using as a mobile holiday-home. Most often, these “homes” are used as a permanent residence. One can buy a pre-made house for $40 thousand - $50 thousand, while its construction would cost almost twice cheaper.

Project

Fuyuhito Moria from Japan has purchased one parking space in central Tokyo, and built a small house to live together with his mother.

This compact three-storey, pizza-slice-shaped home was built by Side Architects and designed specifically to fit on the plot sized barely 30 square meters. Rooms are located on top of each other; access to the next floor is gained through the triangular spiral staircase. To make such a tiny space suitable for life, architects and designers have thought through every detail. Compact built-in furniture and numerous corner cabinets, where one can hide their stuff and small household appliances, designed specifically for the rooms not to appear small or cluttered.

Mr. Moria has paid $500 thousand for his new home - a very low price for Tokyo, which, despite the fall in land prices, remains to be one of the world’s most expensive property markets.

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